According to a press release from HomeAway, inc. vacation homes outperformed sales of primary residences and investment homes in 2010. More than 500,000 vacation homes were purchased last year. Vacation homes are different than rental investment properties in that they target short stays primarily, though some are also used for extended stays.
The number one reason why vacation home buyers chose to purchase last year was low real estate prices. In fact, 38% saw decreased prices as the primary reason for purchasing a vacation home in 2010. The next highest response showed that 27% of vacation home buyers cite a desire to have a personal vacation retreat to use as they wish as the main reason for their 2010 purchase. Low mortage rates was 4th with 11% of the responses.
The vast majority of buyers plan to rent their vacation homes out within the first 12 months after purchasing and believe they can cover at least half of their mortgage payment with the rental income.
Mission Mortgage can provide lending on vacation homes. As an investment property, a mortgage for this type of purchase is subject to certain restrictions and limitations, but are a common transaction for us. We’ve helped hundreds of investment buyers over the years and we’ll be glad to help you with yours. Email us at email@example.com for more details.
The complete, original press release from HomeAway follows:
LOW PRICES, ATTRACTIVE MORTGAGE RATES HELPED SPUR 2010 VACATION HOME PURCHASES, ACCORDING TO NEW HOMEAWAY RESEARCH
Nearly All Vacation Home Buyers Say They Plan to Rent Out Their Property to Travelers in the Next 12 Months, With Nearly Half Saying They Believe They Can Cover At Least Half of Their Mortgage with Rental Income
AUSTIN, TEXAS, March 30, 2011 /PRNewswire/ — While the overall residential real estate market is still down, sales of vacation homes fared better than sales of primary residences and investment properties in 2010. In fact, some consumers found low real estate prices, attractive mortgage rates and the potential for price appreciation compelling enough reasons to buy more than half a million vacation homes last year, according to proprietary research commissioned by HomeAway, Inc. as part of the National Association of Realtor’s (NAR) 2011 Investment and Vacation Home Buyers Survey.
The research found 38% of vacation home buyers decided to purchase a vacation property last year primarily because of low real estate prices. And 2010 proved a good year to buy, according to the NAR survey. Median sales prices for vacation properties dropped 11.2 percent from $169,000 in 2009 to $150,000 in 2010.
Other vacation home buyers cited the following factors as the most important reason to take the plunge into vacation home ownership last year, according to HomeAway® research:
- Wanted a personal family retreat (27%)
- Potential for price appreciation (12%)
- Low mortgage rates (11%)
- Other (13%)
“Vacation homes are more attainable than ever for consumers of all ages, thanks to attractive prices and the fact that people can rent them to travelers to help offset the costs,” says Brian Sharples, chief executive officer of HomeAway. “As the NAR report shows, about four in 10 buyers last year were under the age of 45.”
Vacation Home Owners Believe Rental Income Can Help Offset Mortgage on Second Home
Although few vacation home buyers cited rental income as the most important factor in their decision to buy last year, about seven in 10 buyers (69%) said it influenced their decision.
In fact, nearly all (94%) of vacation home buyers say they do plan to rent their property within the next 12 months to either long-term or short-term renters or a combination of the two, and 60 percent of buyers believe they’ll make enough rental income to cover at least half of their mortgage.
Of those buyers, about 44 percent plan to make their vacation homes available for rent between one and eight weeks over the course of the next year; 42 percent plan to rent their properties between nine and 26 weeks per year; and 15 percent plan to rent their homes between 27 and 52 weeks per year.
Vacation home buyers are willing to rent their property to more than one type of guest. The vast majority (74 percent) of people who plan to rent their property to short-term renters say they’ll rent the home to vacationers, while 36 percent plan to rent to business travelers and 23 percent plan to rent to other tenants, such as college students or people who are relocating to the area.